Five Auto Insurance Myths

Your Insurance Advisor, Hometown Insurance Agency

Myth 1 – Everyone has auto insurance because they have to have it

The Insurance Research Council (IRC) estimates that 1 driver out of every 7 drivers in the United States is currently uninsured. This is especially startling considering that an accident with an uninsured or underinsured driver can result in significant costs that aren’t covered by a basic liability insurance policy. In the event of an auto accident with another vehicle that is under or un-insured, uninsured motorist (UM) coverage – also called uninsured motorist bodily injury (UMBI) insurance – will cover you and your passengers for:

• Medical expenses
• Pain and suffering
• Lost wages

Under this coverage, you and your passengers are basically protected if you are the victim of a hit-and-run accident.  Check your policy! Your uninsured motorist coverage should match your bodily injury liability coverage.

NOTE: In some cases, a driver might have some liability insurance but not enough to cover your injuries and/or damages. Underinsured motorist coverage can be used to offset the costs.

Myth 2 – If other people drive your car, their auto insurance will cover them in the event of an accident

In most states, the auto insurance policy covering the vehicle is considered the primary insurance, which means that the owner’s insurance company must pay for damages caused by an accident. Policies and laws differ by state, and you should be familiar with these differences when allowing another person to drive your car.

Myth 3 – Your credit has no effect on your insurance rate

Your credit based insurance score does matter.  An insurance score is a measure of how well you manage your financial affairs, not your financial assets.  Many insurance companies take your insurance score into consideration when you want to purchase, change or renew your auto insurance coverage.  Because the majority of people have good credit and insurance scores are derived from a person’s credit history, most people pay less for insurance when insurance scores are entered into the pricing equation.

Myth 4 – Your insurance will cover you if your car is stolen, vandalized, or damaged by falling tree limbs, hail, flood or fire

Comprehensive and collision coverage are optional coverages.  Lenders frequently require drivers to buy comprehensive and collision coverage as a condition of a car loan or lease agreement.  Those driving older cars sometimes often drop these coverages as a way of saving money.  If a car is worth less than $1,000 or less than 10 times the insurance premium, purchasing the optional coverages may not be cost effective.  But bear in mind that you need to purchase both collision and comprehensive coverage in order to fully protect your vehicle from primary types of damage.

Myth 5 – It costs more to insure your car when you get older

Quite the opposite can be true! The best way to keep your auto rates down is by having a good driving record. If you have a clean record and longevity with one carrier, they may offer a discount. While some companies may assess risk to us as we age, not all will. Drivers can also qualify for a reduction in auto insurance rates, typically 3 years, if they have successfully completed an accident prevention course. Insurance companies will usually provide up to a 10 percent discount on car insurance once the certificate of completion is provided.

Call our Hometown Insurance Agency licensed agents for a quote today. We are here to help you assess your current coverage, the time to check your coverage is before you need it! Call us at 1-800-568-7283 or email us at service@hometowninsurance.com